J&J could invest in Salt Lake City-based Coherex Medical (Update)
Joey Ferguson, Deseret News
(Updates with comments from Coherex's board beginning in third paragraph.)
Johnson & Johnson may invest in Salt Lake City-based Coherex Medical Inc., a medical device maker, Coherex's chief executive officer said.
Johnson & Johnson, the New Brunswick, N.J.-based health-care supply company, will buy equity and debt from Coherex, which make closure devices for holes in the heart septum, Coherex Chief Executive Officer Richard Linder said in a telephone interview on Feb. 7. The deal will likely close by the end of next week.
The Deseret News previously reported that Linder said J&J may invest around $85 million. The company's board said those figures and other terms in this article are inaccurate. Because of ongoing negotiations, Coherex declined to give any additional terms.
“Rich Linder, CEO of Coherex Medical was recently discharged from the hospital with an acute illness and was interviewed in the setting of prescription medication use," said Brian Whisenant, chairman of Coherex's board, in an email. "The referenced interview includes numerous inaccuracies. Coherex apologizes to Johnson & Johnson, Boston Scientific, and Medtronic for these inaccurate statements and for this confusion. All of us at Coherex wish Rich a speedy and full recovery.”
Reached by email, Linder said he approved of the board's statement.
“My gut is Coherex will go to Johnson & Johnson,” Linder said in a telephone interview on Feb. 7. “It will not be an acquisition. Rather, it will be in the form of a strategic investment where many millions of dollars would be award to Coherex by Biosense Webster,” a Johnson & Johnson affiliate that deals in the diagnosis and treatment of cardiac arrhythmias.
“The debt component brings a tremendous amount of money to Coherex,” Linder said. “If we continue on in our relationship three to six months down the road, you’ll see an exit.”
During the six months, J&J will have access to data on migraine headaches gathered by Coherex in its overseas markets. The company’s device is designed to patch up holes in the septum that fail to close naturally after a baby is born, which are linked to migraines.
Coherex, which was founded 2003, is applying for approval in markets in Asia, Canada and Europe. It has not made it to America because of FDA regulations, Linder said.
The amount of equity Johnson & Johnson will receive in the deal is still in question, but it has to be less than 10 percent, said Linder.
Despite having to give up equity in the company, Coherex executives are not concerned with dilution, Linder said.
Coherex will be giving up voting shares, he said. J&J will not hold control of the company, Linder said. The company’s board will continue to make decisions without any interference from the worldwide medical supply company.
The board, which Linder is a part of, includes Dinesh Patel, a managing director with vSpring Capital, and Dr. Brian Whisenant, medical director for structural heart disease at Intermountain Healthcare.
The company has been in talks with Johnson & Johnson for nine months, Linder said.
“It has taken a long, long time,” Linder said. “But it’s also helped us to get to know the other party better and we’ve built some trust over those nine months.”
Other companies, including Minneapolis-based Medtronic and Natick, Massachusetts-based Boston Scientific, have also been in talks with Coherex, Linder said.
Both of the companies wanted earn outs, or payments that come based on company performance, which Coherex wouldn’t agree to, Linder said.
“Boston Scientific had a chance to buy us some time ago,” Linder said. “Boston isn’t in a position to buy Coherex Medical.”
Device performance and physician feedback of the Coherex product will be the determining factor on whether or not Johnson & Johnson finalizes the deal, Linder said.
Cohorex raised more than $32 million in capital with more than half of the funding coming from a $16.5 million series B investment round. Some of the company’s backers include Salt Lake-based vSpring Capital and Oxford BioScience Partners in Boston.
Stoel Rives LLP, a Portland-based law firm with offices in Salt Lake, and the Utah Technology Council awarded Coherex with the Utah Innovation Award for Medical Devices in 2007.
- 10 jobs you can get right now
- 10 things to know about corporate inversions
- Summit County sees credit card breach after...
- Amish country bristles at ‘Mafia’...
- 6 financial moves to prevent sleepless nights
- Kennecott hopes project will change mountain...
- 3 ways insurers can still avoid covering the...
- Applications for US unemployment aid slip to...
- 10 things to know about corporate... 32
- 3 ways insurers can still avoid... 13
- Amish country bristles at... 10
- Mimicking the airlines, hotels get... 9
- Paul Mero steps down as head of... 9
- Burger King in talks to buy Tim Hortons 8
- Cantwell targets small business loan... 4
- Applications for US unemployment aid... 4